PER THE KANSAS CITY FED, EXPECTATIONS FOR FARM INCOME DROPPING RAPIDLY

For those states comprising the Kansas City Federal District (Nebraska, Mountain States, Kansas, Missouri and Oklahoma), the expectations for farm income have dropped dramatically due to the drought.  The district just released report on the second quarter agricultural credit conditions.

The report presented a chart of actual income versus expected income by quarter from 2004 to now.  

This district has substantial livestock operations so the high cost of feed is more negatively impacting farm income than perhaps other reporting districts.

Farmland prices have increased dramatically from a year ago.  Nebraska leads the pack with a 36.5% increase in non-irrigated land, with some of the other states not too far behind.  However, expectations going forward is for flat farmland values for the next year or so due to the drought.  Also, there is probably some “fatigue” setting in from the rapid appreciation in values.

 

 

USDA REPORT ON FARM GROWTH

Every paper has reported on the increase in farm income increase by 3.4%.  I won’t rehash those well written articles but, I thought you might be interested in the actual report. 

To view the USDA Report: CLICK HERE

PIG WINGS

Americans love chicken wings. Last year they ate three billion pounds of the sauce-covered poultry products. Buffalo Wild Wings, a Minneapolis-based restaurant chain that specializes in wings, has a market cap in excess of $1 billion. Great Sea of Chicago, makes Korean-style wings that are so addictive they have wall of fame for most wings consumed by one person in a sitting. (The record is 90.)

Americans also love pork. More than 80% of households eat "the other white meat." Bacon is so beloved it is being added to everything from vodka to ice cream and body fragrance.  I have a great client (fargginay) in Chicago that sells a cologne called bacon.

Now “Pork Wings” are catching on.  Some people seem to be passionate about the new “pork wings."  These passionate consumers are called "Pork Dorks."

This new use of pork is apparently being launched by Farmland Foods, a division of Smithfield Foods.  They are in the midst of transforming Farmland Foods from a supply/commodity company into a demand-driven innovator.  Pig wings are one of many examples of what Farmland is attempting. (Others competitors like Pioneer Meats also market them.)

The product itself is a delicious cut of pork (which butchers know as the "shank," a part of a pig's leg) that you can eat with your hands like a chicken wing. A review of pig wings describes them as, "surprisingly tender and juicy, pulling clean off the bone." Think of it as a meatier, less messy version of a pork rib. It is becoming so popular that the New York Times did a review of the new delicacy.  I have not seen “pig wings” yet, but restaurants who serve pig wings say consumers love them.

RENTING PROPERTY TO YOUR CORPORATION MAY HAVE UNEXPECTED RESULTS

Renting property to a corporation you own may not get you a tax break.

You can’t always use the net rental income to offset other passive losses, as demonstrated by this case where a man set up two pass-through businesses to lease tractors and trailers to his corporation.

Because his firms rented property to a closely held corporation in which he worked more than 500 hours per year, that triggered a special rule that treats the net rental income as nonpassive income. Although many of the rentals were profitable, some produced losses. Nevertheless, the Service recharacterized only the net rental income (Veriha, 139 TC No. 3).

TEN TAX TIPS FOR INDIVIDUALS SELLING THEIR HOME

The Internal Revenue Service has some important information for those who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may be able to exclude all or part of that gain from your income.

Here are 10 tips from the IRS to keep in mind when selling your home.

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

3. You are not eligible for the full exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

4. If you can exclude all of the gain, you do not need to report the sale of your home on your tax return.

5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

6. You cannot deduct a loss from the sale of your main home.

7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.

8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

9. Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523, Selling Your Home, for details.

10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

YEAR-END PLANNING: MAKING THE MOST OF QUICK WRITE-OFFS FOR CAPITAL GOODS

Although bonus first-year depreciation and more-generous Code Sec. 179 expensing limits have been extended before, another lease on life for these tax breaks is far from certain this time around.

Unless Congress acts, additional depreciation deductions under Code Sec. 168(k) in the placed-in-service year equal to 50% of the adjusted basis of qualified property won't be available after this year.

Also, the Code Sec. 179 expensing limit is set to plummet to $25,000 for property placed in service next year.

Because of this uncertainty, business owners planning to purchase machinery and equipment during the remainder of this year or early the next should try to accelerate their buying plans, if doing so makes sound business sense.

FRUSTRATION OVER FARM BILL BUILDS

(Nebraska Radio Network) -- NebraskaRadioNetwork.com reports, "Nebraska's Congressional delegation dealing directly with agriculture legislation expresses frustration that a new Farm Bill hasn't passed Congress."  The current farm bill expires this year.  The current law, which includes authorization for more than $80 billion worth of food stamp and nutrition programs, expires Sept. 30.  "Congressman Jeff Fortenberry, a member of the House Agriculture Committee, isn't sure a Farm Bill will pass this year" and that "Congress might be forced to extend the current policy for a year."

To read more of the article: CLICK HERE